What Is Compound Interest?
Compound interest is interest earned on both your original money and on the interest it has already earned. Each time interest is added, the next round is calculated on a slightly larger balance, so your savings grow faster and faster over time. That snowball effect is why starting early matters so much for long-term saving and investing.
This calculator shows the final amount, the total interest earned and the growth multiple (how many times your money has multiplied) for any starting principal, rate, time period and compounding frequency.
The Compound Interest Formula
The calculator uses A = P(1 + r/n)^(n × t), where P is the starting principal, r is the annual interest rate as a decimal, n is the number of times interest compounds per year and t is the number of years.
Example: $10,000 invested at 6% compounded monthly for 10 years grows to about $18,194, so you earn $8,194 in interest. The same deposit with simple interest would earn only $6,000.
How to Use This Calculator
- Enter your initial principal, meaning the amount you are starting with.
- Enter the annual interest rate (APY or expected rate of return).
- Set the time period in years.
- Choose how often interest compounds: daily, monthly, quarterly or annually.
Frequently Asked Questions
Does compounding frequency make a big difference?
It helps, but less than most people expect. Moving from annual to monthly compounding adds a small amount each year. The interest rate and the length of time invested have a much bigger effect on your final balance.
What is the Rule of 72?
The Rule of 72 is a quick estimate of how long money takes to double: divide 72 by the annual interest rate. At 8%, money doubles in about 72 ÷ 8 = 9 years.
Does this calculator include regular monthly deposits?
No. This calculator shows the growth of a single lump sum. To plan regular monthly contributions toward a target, use our Savings Goal Calculator.